Grocery Chain Settles Labor Complaint

Ralphs Grocery Co. agreed to pay $70 million in restitution and fines as part of a plea agreement involving charges of illegally hiring hundreds of workers under fake names during a 2003 strike and lockout, the company said Friday.

As part of the deal with federal prosecutors, the chain will plead guilty to conspiracy and identity fraud as well as violating laws involving employee benefits and record-keeping for the Social Security Administration and Internal Revenue Service, the company said.

Forty-eight other counts in the federal grand jury indictment returned in December will be dropped if the plea deal is approved by the court.

"We believe in accountability," Ralphs President Dave Hirz said in a prepared statement.

"Most of our managers followed the law and adhered to company policies. Nonetheless, the illegal hiring of some locked out employees that occurred at Ralphs during the strike was wrong and we regret that it took place," he said.

The company will pay $50 million in restitution for Ralphs employees who were locked out during the labor dispute and file a claim for back pay. Local union chapter can also collect restitution if they paid lockout benefits.

Some 19,000 Ralphs workers were kept from their jobs at Southern California stores. The company estimated fewer than 300 people worked illegally.

Ralphs will also pay $20 million in fines and be placed on three years probation.

The United Food and Commercial Workers union, which assisted prosecutors in determining the financial aspect of the settlement, hailed the deal as overdue justice for employees who suffered financial hardship during the nearly five-month labor dispute.

Ralphs, a unit of Cincinnati-based Kroger Co., initially pleaded not guilty to all the charges in January and trial was set for Aug. 15.

The indictment accused Ralphs of engaging in a "companywide course of criminal conduct involving the hiring of locked-out employees under false names, Social Security numbers and documentation."

Federal prosecutors said the grocery chain issued thousands of paychecks to falsely identified employees and allowed the workers to cash the checks at its stores.

In hopes of hiding the practice from the workers' union, the company sent the locked-out employees to work at markets far from the outlets where they were usually assigned, according to the indictment.

Some workers falsified job history and wore name tags bearing their bogus names, prosecutors said.

Ralphs locked out employees on Oct. 11, 2003, after Southern California grocery workers voted to strike against Safeway Inc.'s Vons and Pavilions chains.

At the time, Ralphs, Safeway and Albertsons Inc. were negotiating with the workers' union. Ralphs brought in replacement workers to keep its stores running. In all, about 59,000 workers were idled at 859 sites.

The strike cost store owners more than $2 billion by some estimates and resulted in the loss of many customers.

By Alex Veiga